So Apple just reported their first quarterly earnings which included sales of their new iPhone accessory the Apple Watch. Did it go as I expected? Almost exactly. 

Remember Tim Cook’s comment last quarter when he dropped the info that the Apple Watch was going to be pulling in below average gross margins? I ran some numbers and came to the conclusion that the watch would have to exert over a one point drop in the corporate average to justify Tim’s comment. Q3 2015 came in at 39.7% which was three tenths higher than the previous year of 39.4%. However, Q3 2014 was before the launch of the golden goose that is the iPhone 6 Plus. Apple’s gross margins would have been up even without the 6 Plus because the iPhone is simply a larger piece of the mix. But the 6 Plus magnifies the impact by driving up the average selling price with it’s $100 higher price tag. Look at the 2015 vs 2014 gross margin spread for Qs 2 and 1 and compare it to the spread for Q3.

Tim Cook let out a juicy little tidbit during the analyst's conference call this week when discussing Apple Watch sales. Said Tim, "On the watch, our June sales were higher than April or May. I realize that's very different than some of what's being written, but June sales were the highest, and so the watch had a more of a back-ended kind of skewing."

This comment from Tim seemed to really surprise some people, so I'm not quite sure that everyone understands the financial structure that Apple has to follow. It may be helpful at this point to explain how U.S. GAAP (Generally Accepted Accounting Principles) defines a "sale".

I never understood the appeal of the BMW 3 series until I drove one for myself. It was like seeing a color movie for the first time or getting my first taste of ice cream. From that day on, I didn't want to drive anything else. It’s hard to explain why and only someone who appreciates precision driving would understand. If you just want a smooth ride from point A to point B then it doesn’t matter what you drive. And judging from the number of new Corolla's and pickup trucks getting sold every year that would include quite a few people. But if you can appreciate the comfort level of a 50/50 weight balance, brakes with linear “feel”, and a tight suspension on a low center of gravity, you will know what it means to really drive. And don't get me started on the beauty that is BMW's turbocharged inline-six engine. 

The Chinese stock market implosion and NYSE shutdown this week gave Apple’s stock price quite the roller coaster ride with two days of huge losses and a gigantic recovery on Friday. At the closing bell Friday the 10th, Apple Stock was priced at $123.28 per share. 

This got me to thinking again about how high Apple is valued these days. With a share price at $123.28 Apple has a market capitalization of $710.22 billion. In theory, the market capitalization represents the present value of all of Apple’s future earnings. It’s kind of like a lottery winner deciding to take the lump sum payout versus getting checks for the next twenty years. Apple’s “market cap” is the lump sum payout of all their future profits. The stock price is simply the full market cap divided by outstanding shares of stock. 

As I laid out in my earlier article, I'm a big believer in the need for a larger iPad. But the iPad Pro has two big problems:

1. There is no vocal constituency clamoring for one.

2. Most users would never buy one for themselves.

There is no vocal constituency for the iPad Pro for two reasons. First, the most likely users are busy business people who don't participate in the global naval gazing that is Twitter.  Second, a lot of these future users don’t even yet know that they want one.